Hanford contractor reaches $1 billion spent with small businesses

Washington Closure Hanford has awarded $1 billion in subcontracts to small businesses to help with environmental cleanup of the Hanford nuclear reservation, said Tri-City business leaders, who thanked the company at a press conference Thursday.

More than half of the $1 billion spent in the past eight years has been pumped into the local economy.

But the announcement came as Hanford subcontracting is changing because of several factors, including a tight budget and new small business and contracting policies.

Washington Closure’s subcontracting policy has been a success since it was awarded a contract by the Department of Energy in 2005 to clean up Hanford along the Columbia River, business leaders said. The contract is valued at $2.4 billion.

“This is about preserving the environment and sustaining the economy,” said Keith Klein, executive director for the Tri-Cities Local Business Association.

Most of the money, $783 million, has gone to businesses in Washington and $580 million of that has been spent in Benton and Franklin counties, including home-grown companies, according to Washington Closure. Among the local companies that have won subcontracts are Federal Engineers and Constructors, George Grant Inc., Ojeda Business Ventures, Watts Construction, A and A Motorcoach and Dade Moeller.

“This money is money that stays in our community,” said Lori Mattson, president of the Tri-City Regional Chamber of Commerce. It helps to support assets ranging from schools to other small businesses, she said.

Small businesses have been a major contributor to the success of cleanup in the land along the Columbia River, said Carol Johnson, president of Washington Closure.

“They provide a broad collection of talent and expertise, which has allowed us to accomplish work safely, effectively and cost efficiently,” she said. Work to date had been done at a cost $300 million less than projected, according to DOE.

Projects assigned to subcontractors have included expanding or operating Hanford’s huge landfill for low level radioactive waste, digging up contaminated waste sites, removing asbestos and other hazardous materials from buildings and hauling waste.

The $1 billion spent with small businesses represents 92 percent of all dollars Washington Closure has spent on subcontracts since 2005.

Washington Closure has been aggressive in its small business contracting strategy, said Greg Jones, the DOE Richland Operations Office assistant manager for business and finance.

“It takes effort,” he said. “It takes outreach.”

It can seem easier and often faster in the short term for DOE contractors to do Hanford work themselves, said Klein, a retired DOE Hanford manager.

“But if they write good (sub)contracts, they can leverage the efficiencies of small and medium companies,” he said.

It also helps the companies, which can gain experience and build up their resumes to attract more business from outside Hanford, he said.Washington Closure has completed almost 90 percent of the work under its contract, which ends Sept. 30, 2015, unless extended by DOE for a few remaining projects.

And another Hanford contractor, CH2M Hill Plateau Remediation Co., has moved to have more work done by its employees rather than subcontracted workers assigned to work in-house. But there is opportunity for CH2M Hill to subcontract more projects, where subcontractors do traditional field work rather than provide staff augmentation, according to DOE.

The opportunities for subcontracting also have decreased sitewide with tight Hanford budgets, causing contractors to cancel some subcontracted work and spend their money on retaining staff.

Washington Closure has shown that subcontracting can be cost efficient and safe, and the outlook for subcontracting going forward will depend on government policies that move work forward rather than continuing to study projects, promote small business and spread out the budget so the benefits do not all go to the same company, Klein said.

The Tri-City Development Council is concerned about a new Small Business Administration policy that requires DOE to award 7 percent of Hanford work to small businesses, but does not consider subcontracted work in that goal.

“When you see success, you need to build on it,” said Gary Petersen, TRIDEC vice president of Hanford programs. “You don’t revise it and do worse.”

DOE could meet its new obligations by awarding large contracts to one or two businesses that still qualify as small but may have a national presence already, according to TRIDEC. Now the system spreads work to hundreds of small businesses, many of them local and too small to afford the time and expense of the requirements of bidding for direct federal government work.